What to do if you can’t pay your bills (2024)

There’s no doubt that for many people have suffered a big toll on their finances. Whether you’re down an income (or two) in your household, or waiting on unemployment or small business help, you might be stressing about what to do with the stack of bills that is piling up or on the way.

On the positive side, federal and local governments have put various actions in place to help protect people from losing their homes, having their utilities turned off, or having their credit ruined in the short term. But as the pandemic progresses and shutdowns continue, being proactive about your monthly expenses and obligations is key to preventing long-term financial damage.

Here are some strategies for coping with not being able to afford the most common monthly expenses.

Rule #1 to remember: You cannot just ignore the bills.

What to do if you can’t pay your mortgage:

What you need to know: Under the CARES Act, if you have a federally-backed mortgage, you are allowed to requires a reduced or deferred mortgage payment for up to 180 days. After that, you can make a request for an additional 180 days. It’s also guaranteed that banks cannot foreclose on you through May 18, 2020. They are also not allowed to charge additional fees, penalties or interest.

What you need to do: Contact your loan servicer as soon as you think you may have difficulty paying your mortgage. Do not wait until you are months behind. In most cases, there is no complicated application process. Approval should be automatic.

If your home loan is not federally owned or backed by HUD, USDA, FHA, Freddie Mac, Fannie Mae, or VA, you should still call your servicer. Depending on your state, you may still be entitled to mortgage relief options.

Once you confirm that you are eligible for some type of relief, confirm what it will entail. For example, you may be able to add the months you don’t pay onto the back end of your loan. Or, you may opt to lower your payment amount for a period of time and then agree to
make higher payments at a later date. For more information, visit the Consumer Financial Protection Bureau.

What to do if you can’t pay your rent

What you need to know: If you live in federally supported housing or in certain states, you may be protected from eviction for 120 days if you can’t afford your rent. After that period, the landlord must give you 30 day’s notice before you have to vacate.

What you need to do: Confirm if your local government is offering this protection. Work with your landlord, especially if you have a good relationship, on a temporary solution. If you’re receiving federal rental assistance, you should contact your local public housing agency or landlord to request an income recertification or a hardship exemption if you’re out of work. For more information, visit the House Committee on Financial Services FAQ sheet.

What to do if you can’t pay your bills

What you need to know: Most companies have programs in place to help customers who are having trouble making payments. But you need to be proactive and get in touch – don’t wait for your debt to be sent to collections. The CARES Act has rules around suspending negative credit reporting if you are not making certain payments, while states have rules in place to ensure that utilities and phone carriers not turn off service for struggling
customers.

What you need to do: Reach out to companies as soon as you know that paying bills will be a problem. Ask to speak to their hardship department. You can also check your online accounts since many companies are posting their Covid-19 policies with clear steps you can take if you’re struggling.

• For student loans: The federal government suspended student loan payments through September 2020, so there is some relief there.
• Utilities: For electricity, gas and/or water, check with those companies and your local municipality to see if there is a moratorium on service shut-offs. Then, get in touch to discuss your alternative payment options.
• Credit cards: Many credit issuers offer programs for short-term relief. Again, you want to get in time right away to go over your options. Don’t wait until you are past due.
• Car insurance: Many auto insurers are giving customers rebates on their premiums of up 15% to 25%, for one to six months. Check in with your insurer to see if you’re entitled to that, and if you’re having trouble paying.
• Car lease/finance: While this will vary by lender, see if there is a payment assistance program for your auto loan. Many are allowing customers to defer payments for three or four months without late fees, and/or putting customers into a lease extension.
• Cell phone/internet: Many providers have pledged to keep customers connected even if they are 60 days behind on their bills.

The Bottom Line

If you are in a situation where you’ve lost your income and can’t pay your bills, you have to be proactive with your lenders, banking institutions, utilities, and others. Keep these tips in mind:

• Pay what you can. If you are still earning an income and have the means to keep paying your bills, do so for as long as you can so that other people who really need the help can benefit.
• Scale back. If you are able to trim expenses, such as by limiting the number of subscription services you have, consider doing it as every little bit helps.
• Get ahead of the problem before your bills are overdue. Waiting until you are late to get in touch may end up negatively affecting your credit. List out all of your bills and contact them one by one.
• Try going online first. Wait times on the phone will be long due to high call volume so if there’s an option to apply for relief online, try that route first.
• Know your rights. Read up on The CARES Act as well as the protections and programs offered in your state.
• Have a plan to pay back your debts. Eventually, any bills you put off now will come due again at some point. Once you are earning income again or collecting unemployment, be diligent about getting back on track.

For more articles on Living on the Cheap:

• What you should know about buying a car
• How to reduce your energy use
• Healthcare documents everyone should have
• Make your own simple face mask